Banking on Digital Growth
Banking on Digital Growth

Episode · 1 year ago

63) #ExponentialInsights: Preparing for the Wrecking Ball in the Boardroom w/ Kirk Drake


Every FinTech uses AI.

Some gain competitive advantage. Others solve old problems in new ways. All see better results than their non-AI competitors.

FinTechs are creating the future. Yet most banks and credit unions aren't even thinking about AI. Why is that?

In this episode of Banking on Digital Growth, I talk with Kirk Drake, president and CEO of Ongoing Operations and author of CU 2.0: A Guide for Credit Unions Competing in the Digital Age.

We talked about:

  • Why you need to disconnect from your perception of reality to embrace change
  • How fast AI is going to disrupt everything
  • The opportunities AI presents to financial brands

You can find this interview, and many more, by subscribing to Banking on Digital Growth on Apple Podcasts, on Spotify, or here.

One of the things I kind of pocketed away is a lesson that really applied last year was the ability to really disconnect from your perception of reality and embrace agility and change quickly. Right? You're listening to Banking on Digital Growth with James Robert Lay, a podcast that empowers financial brand marketing, sales and leadership teams to maximize their digital growth potential by generating 10 times more loans and deposits. Today's episode is part of the exponential insight Siri's, where James Robert interviews the industry's top marketing sales, and Fintech leaders sharing practical wisdom toe exponentially elevate you and your team. Let's get into the show. Greetings in Hello, I Am James Robert Ley and welcome to the 63rd episode of the Banking on Digital Growth podcast. Today's episode is part of the exponential insight, Siri's and I'm excited to welcome Kirk Drake to the show. Kirk has more than 20 years of experience designing and implementing Advanced technology solutions, systems and strategies for financial brands. He is the CEO of ongoing operations as well a C U two point. Oh, Kirk is also the author of the book See 2.0, A guide for credit is competing in the digital age, as well as his new book that's now out and available on Amazon titled Financial Helping. Financial Service Executives. Prepare for an Artificial World. Hello, Kirk and Welcome to the show. Good Morning, Great to See you. It is good to be here with you today. Absolutely. You know, one of the things that I've been thinking a lot about is reflecting reflecting on the past, reflecting on 2020 and when When I think about that, what's been the greatest lesson that you have learned coming out of 2020 and into 2021? Yeah, I think you know, it's interesting. Having worked with Paul Fiori, Etc. Wallet and hundreds of other entrepreneurs over the years in masterminds and other type functions. One of the things I kind of pocketed away is a lesson that really applied last year was the ability to really disconnect from your perception of reality and embrace agility and change quickly. Right? And so you know what? Back in the day, when I was working with fury, if something came up in the business, that was different than what our expectations or maybe it was a market change maybe new competitors, maybe a client. Didn't, you know, go some direction that we wanted His ability to pivot and change and go forward with the new journey was just breathtaking. I mean, it was just so fast. And, you know, I think it what it really taught me over time was when something crazy happens, like cove in that disrupts all of your prearranged business plans and attempts to organize the world into whatever we think reality is, you know that. Really? The quickest thing you could do is rip off that Band Aid. Ignore whatever your you know, our human brains would tell us not to leave the house and never go anywhere and never take any risks. Right? So, you know, ignore all of that and lean into the facts and the information you have right then to make a different plan and change the future to be what you wanted to be. And last year was the first year where I was really able to take six or seven years of those lessons. See covitz see the impact immediately. React, change, you know, reassess and adjust and do that two or three times during the year and it just resulted in fantastic results. You know, across the board and everything I was involved in, you mentioned a couple interesting points, pivoting and changing, moving fast and creating a new reality or creating a new future. And this is something that you've been doing and I would call practicing to your 0.6 years. Was it...

...easier for you to do it Because you've had this practice. Is this in aid? And why do some financial brand leaders struggle with this idea of accepting, embracing and really moving towards change? I think s so I don't think it's easy. I think it it requires muscle memory and on internal belief for value system that says, I'm gonna hit the overwrite button, what my brain is telling me and how I'm feeling to take a step back and reevaluate where I thought we were, where I thought we were going versus reality. And I think you know, if you think about strategic planning or how you lead a team or any of those things, all of these things are designed to build coalescence or consensus around a theme or concept and get group buy in, and then you know, go off and execute something. And the reality is that takes a huge amount of emotional energy to get people on the same page and going the same direction. And so when a crisis occurs, you know, I think there is. It's, you know, the usual stages of grief. You're angry, you're frustrated, your you know, all those sort of things. But the reality is, the faster you can move through those and accept each stage and move onto the next one is the faster you can adjust the marketplace. And to me, the greatest companies are the ones that are able to do that consistently over time and really adapt and change quickly. But to adapt to change, we really have to disconnect from our fears at the end of the day and conquer those. And the fears are really, at the end of the day, mostly unfounded, right? Like they're just our reptilian brain ratcheted back to caveman era, where were designed to react to certain stimulus in our environment that don't really actually exist anymore. Well, there is that old analogy of fear being false evidence, appearing riel and your point. It is about hitting the reset button, and I think if I can encapsulate your thought, it all comes down to one word. It's awareness. It's awareness of where we've been, where we're at and where we can go next and accepting that loss. And you mentioned the stages of grief. It's accepting the loss of the old self to create the space and time to create the new self. The individual, the team, the organization, if you will. Which is where I'd like to take the conversation because you've got this new book out, financial, and you write. Every fintech uses AI. Some gain competitive advantage. Other solves old problems in new ways. All see better results than than their non AI competitors. They're creating the future. Yet most banks and creditors aren't even thinking about AI. Why is that? So I think it's easier to assume it's not gonna happen to us. And that and that we're not that there isn't any urgent and pressing threat right from it than it is to accept, you know, because the reality is you could react really hard and go, so we're gonna do everything in a I, and that's an outside reaction to write you know the whole credit is not going to shift tomorrow to AI. But you can bet over the next 5, 10, 15 years it's gonna have repeated significant changes in that regard. And instead of you know it Z e think of it was a great comic I saw that said, You know who had the biggest impact on digital transformation? CTO the chief experience officer or cove it on and covert. It was typically visualizes the wrecking ball coming into the boardroom. Yeah, but the reality is that trend was so underway for so long that the credit unions that had made material progress on it have have. It's effortless. There it appears, effortless is they ride that next transition in. They're the ones that are really, you know, put their head in...

...their sands and said, It's gonna be all branch first human to human piece. They're the ones that have the biggest lift in that struggle and have the biggest short term pain in that equation. And I think a I is gonna be similar. You're going to see layers of things peeled off that don't feel particularly disruptive. But if you do nothing for 10 years and you look up at that point, it's gonna be hugely disruptive and even, you know, I go one step further to me. I don't think it's all that important that credit loans be, you know, investing hundreds of hours into a I right now, I do think if you look where the path is going to go to be able to take advantage of AI, you're gonna have to be on cloud right. To take advantage of that, you're gonna have to have structured data and and really put your analytics not just into solving day to day problems, but making it actionable on automated across everything robotic process, automation. And you know those things. And so if the credit isn't tackling cloud robotic process automation and analytics and investing heavily in those three trends, when the trend does occur on a I, and it's going to occur faster than any other trend we've seen before, right, because once once it hits, it creates a competitive advantage. It's unstoppable, right? You know, I think you look look at Tesla right now is a perfect example, right? They have such a huge lead in a I that most of the other auto manufacturers have assumed that they have lost that back, right? That it is just It's not even the battery technology or the electric car piece of it or navigation or any of that. It's their long term valuation, to my opinion, is driven entirely around their AI model and whatnot. Well, you mentioned a story in the book and hearing you talk through that, it's almost it makes me think of like what we view is the overnight success, because you you mentioned, you know, a lot of financial brands who have been making investments, making Progress Cove. It hit, and they've been able to really look like they've come out of, like, where did they come from? Why is this happening? Well, it's because they had been making the investments ahead of time, and this was an easy transition and to your point, like 10 years looking back and you shared a story which I felt like we're living parallel lives about the subject of of learning and of math and the calculator. And, you know, you grew up hearing Oh, you know, you're gonna need to do math by hand because you're not always gonna have a calculator. We'll look at where we're at. Look at where our kids are. And so when we look at exploring the past to understand the present so we know where we need to go next in the future. Why is it important? Because you wrote about these three timelines of human progress in the book. Why is it important to at least gain a sense of understanding about these timelines when it comes to a I? Yeah, I think the key. You know, if you look back at all the you know, you look at electricity. It took 50 60 years for it to kind of become ubiquitous. Smartphones took six or seven years, right? Um, Ai Chatbots took two or three, right? And and so each one of these trends is happening faster, more disruptive. Lee, you know, in that regard a funny Segway. They're having this conversation with my wife where, you know, she was trying to buy some pants for our kids the other day. And because, man, you know, the PayPal integration isn't working. I can't pay for whatever it is. And five years ago should be pissed off, right? And today she's like you know the pace of all this technology. All this change is going so fast that there's not even reasonable for big brands to be testing every single component of their websites and payment integrations. And whatever she goes, I know it's not working today. I know it'll probably be working tomorrow. I'm not going to redshirt complaint. I'm just accepting that the pace is going faster and faster, faster, and it'll fix itself right And and I think, as consumers, Kimberly is a great litmus test for millennials in a number of different ways for May, a couple years younger and just see, she's always on the front end of whatever the trend is for her...

...generation, and it just really highlighted to me how I think we've all accepted the change rate right, and this is the new norm. The new normal everybody talks about is that nothing is normal, right and then it all changed from now. And so I think, coming back to a I, the sequence of interactive changes in the learning that a I is able to do. Look at Tesla's. Three months ago, they rolled out, you know, the driverless, fully automation and really by the end of 2021 it will be everywhere, right? That's a one year, you know, learning in that regard. I don't think I mean, it's crazy because on one hand, test has been around 17 years, right? So nothing they're doing today is really all that, you know, anything we wouldn't have expected. That was probably in their business model 17 years ago. But we feel like Tesla's just like boom on the on the scene and making all of this adjustment. And so I think when we look at AI in our credit units, it's gonna be a similar trajectory where all of a sudden it will feel like it's everywhere. And I think we've already seen that with machine learning. You know the first phase of this. We're seeing it in every aspect of what credit unions and index air doing. What we haven't seen is stage two and stage three, but you can bet those air coming. Well, you know when when when you're talking about Tesla and I think about Elon Musk. One of the biggest driving factors for him has been this idea of first principles thinking, taking things down like like literally having no assumptions about anything going back to zero and starting over. And I think that's what a I machine learning is going to force a lot of us to do. Which is why this perspective of a Q R adaptability quotient is going to be farm or important than I. Q. When we when we think about the future and going forward, because the machine, the AI is going to open up opportunities that we can't even begin to wrap our heads around thinking about AI for financial brands, I'd love for you to talk through a common belief that this industry has, but you passionately disagree with so common belief, I think, and I realize this is a controversial one, but I think a common belief is that service matters, and I feel very strongly that service matters. I also just think 99% of our consumers don't care. They just accepted that digital integration, the accessibility, the convenience, those pieces, arm or important, and I'll give you example. And maybe it's not even that service doesn't matter. It's our definition of service is wrong, right? Which is I can't take any credit have been to that say, you know, trained for service and by the way, I don't actually believe I have any idea of how to actually deliver great service. So let me be very clear on that. But every credit have been who says great services? When the member walks in the branch, we recognize their name and I always go. Yeah, that's the weirdest thing ever. Technology has transformed our world, and digital has changed the way consumers shop for and buy financial services forever. Now consumers make purchase decisions long before they walk into a branch if they walk into a branch at all. But your financial brand still wants to grow loans and deposits. We get it. Digital growth can feel confusing, frustrating and overwhelming for any financial brand marketing and sales leader. But it doesn't have Thio because James Robert wrote the book that guides you every step of the way along your digital growth journey. Visit www dot digital growth dot com to get a preview of his best selling book, Banking on Digital Growth, or order a copy right now for you and your team from Amazon. Inside, you'll find a strategic marketing manifesto that was written to transform financial brands, and it is packed full of practical and proven insights you can start using today to confidently generate 10 times more loans and deposits. Now back to the show. E ai and machine learning...

...give you that capability with facial recognition? Exactly exactly. We find it creepy, right, because it's a t end of the day when I walked into a branch. If they go, Hello, Mr Drake and I have not had coffee with this person. I've not had him over to my house for dinner. I've not been on a phone call that was Mawr than transactional, right? The immediate thought is this person is either trying to get something from me, or they believe there is more of a relationship here than that actually exists. I gotta tell you a funny story on this. My wife and I, I was doing an event. Actually, this was years ago for the New Jersey credit in league, and one of my wife's dreams was to spend the night at the Plaza Hotel. So she flew up there with me, and, uh, we took a car from New Jersey in tow, Manhattan and went up to the plaza and she was She couldn't believe it. She was like, Wow, crying so happy we'll get out of the car And they're like, Hello, Mr Lay. I'm like, how did they know my name? The story goes, I'm like, Did they have some type of data on me or something? My wife, they opened the door for her first. They asked who the name of the reservation was, and I was like, I was kind of let down. I was let down by that experience, I thought it was gonna be some type of cool data integration that I didn't know about. But yeah, you're right. You're right. It is it It provides that kind of that creepiness factor. But at the same time, it also provides some opportunity as well, which, you know, you write one way or another, AI is going to change banks and credit unions is gonna offer new tools, new methods and to this possible new dangers, we have a few choices about how to react to these technological changes. In the pace is that with which they come, we can let it grind us into obsolescence or we can hang onto it try to survive it and jump on early and thrive. I wanna look at both sides of the coin here with you, the dangers and the opportunities. First, let's look at the opportunities that you see with a You've given a couple of good examples, but let's dive deeper into some of the opportunities for financial brands. Yeah, sure. So I think the first one is there. And I think there's two schools of camp on this, one of which is this is a tool for back office, right that allow us to be more efficient there. And the second one is this is This is something we arm our consumers with and allow them to touch tangibly and feel. I think there's risks and rewards on both sides of that. I don't know that I have a good answer for that, I think just like you know, if we look at Vaxxers and anti vaxxers, there's economies both of those things and belief systems that both that that benefit that. And I think you know, the pace of change in and how it's impacting us as humans is causing a great deal of societal friction right now, and it's going to get worse and your steam this kind of bizarre backlash, you know, against Twitter or Facebook, you know, and this further polarization of our society because we believe these technology companies have all this bizarre power in some way, shape or form. But by the way, as a society, we chose to give them right, Thanks that it's the bizarre piece of that, right. Um so I think when we look at it in those service paradigms, we got to kind of build a philosophy around is this back office is at front office And then in that, looking at it from first off, what can it tell us about our consumers that we don't already know? Or that seemingly disconnected pieces of data where we get all not just our existing data around consumers. But all these other data points begin to create a better picture and paradigm shift in that regard. The second piece, I think, is really looking at the efficiency side of things. And then the third piece, I would say, is really looking at the fair and equitable conversation that I think, you know, it was really uncomfortable for us as an industry as a society, etcetera. But and this is particularly challenging. I think in credit unions, which is we have pockets of similarity, right? We're a group of church people Were a group of people that work at this facility. Affinity, right? That affinity bond by default...

...means all of our data is biased, right, that we not fault any national trend or peace. And we're gonna have these pockets of bias and everything we're doing. And so then the question becomes, Do we lean into that and accept the bias and just try to make the bias more efficient? Do we take a step back, try to insert some new data into that equation to make it less bias, but that by its core, if we are a teachers credit union, in some ways we should be biased towards teachers, right? Like and and so that creates an ethical moral conundrum for us to go down. And then I think that service piece of the bias that's going to come out in our employees in on how we're making our own decisions and the diversity and equity and those pieces as another piece fit. So I think, and I would kind of went down a Segway there. I think all of those are really good questions. And then I think that the challenges, that's all great. But in order for us to succeed and have to see this table 10 years from now, we have to do something today, right? And we have to take the first learning step that goes beyond machine learning. That goes beyond, you know, some predictive analytics and makes us uncomfortable because it's through those sequential, uncomfortable moments that we get to truth or we get to a trend or we get to some level of normal. Well, if you think about it, and for the dear listener, go back to the greatest growth that you've made personally that you've made professionally. It has always been in those uncomfortable moments when you've had the courage to lean into that. So you know, when it comes to adopting a I internally, you hit on a key point. This is an emotional conversation. What are gonna be the biggest roadblocks that hold financial brands from either a having that conversation to begin with in the first place because you talked about an opportunity here is back office efficiency. I see the opportunities with that as well. You know, you know, humanizing, automating the predictable to humanize the exceptional great lessons coming out of the Four Seasons experience and experiences, what well defined systems and processes that have been defined applied. And here's the key optimize over a period of time, resulting in a positive or negative emotion. But let's talk about the emotional conversations that have toe happen internally we're here for I think the first one is that it's gonna be perfect, right and that we're not going to get it wrong, right? We have such a quest to deliver perfection in this industry that we won't take and experiment on something and admit that we got it totally wrong, right S. So I think the first point is just being comfortable that really you're better off plugging it, chat bought in and having to go terribly wrong versus not plugging a chat about it. You will learn more from the wrong, and you will improve the credit boom or long term by failing abysmally than than by doing nothing. The second one is punishing those for failure and creating this, you know, bizarre system of the as if our leaders and our managers and our frontline people actually have any of us figured out right. We have attempts and we have best practices. But their best practices, they're not. They're not the only way to do these things right. And so there's, you know, being accepting that, you know, this is gonna be layers of onion and peeling in that respect. The third one that I think is the biggest one is that our internal folks today actually have a shared alignment on vision of where this all is going. And I think if you look at the i t, some of the CTO is out there you look at you know, some of the people who've been in your credit for 2025 years, I would argue they probably don't actually have all that much vested interest in the long term sustainability of the financial industry in your brand as much as their own personal, you know, career, short term things. That's a great point you...

...make about the I t. Side of things because historically speaking, what has I t been? Therefore it's been to protect. It's been to secure. It hasn't necessarily been to advance and go on the offensive side of things. So a couple of things I'm hearing you say, get comfortable being uncomfortable. Except that that that failure is the fertile soil from which new growth springs a new and one of the things you know here in the book. And I think this was a great way toe to tie it all back together and and really bring the conversation Full circle is one of the concerns about a I, you know, for financial brands is the innovator's dilemma, which is that business is built on successful platforms. They have too much at stake to risk everything to your point, even about i t. How can financial brand leaders overcome their past to deal with change in the present and eliminate the fears that might be holding them back to create the future? I mean, I think the first pieces to really have that dialogue and understand what people's fears are and to make sure they've got health healthy enough emotional intelligence and conversations as leaders to understand what those true fears R and a have. You know, the I t. The accounting personal living person who's been there for 25 years and is four years away from retirement going. It brings me back to this conversation with my grandfather. Thank you. And I have talked about this before, where he was in his seventies and I said, Grandpa, why won't you email me? He's like Kirk, You could just fax me. He was like, That's ridiculous. I'm not like handwriting a letter and fax in it to like, What's wrong with you? You helped create Univac. You built, you know, control data like you're an I T guy. Like I don't get this. He's like Kirk. I got, like, 5, 10 years left on the planet. I don't really wanna bother spending a year, but learning to type E I was like, That's a great perspective and I think that's a perspective in most of our credit. Ian's where we've got the person who feels that way right, and we've got to find a way to enable them to be successful and add value for the final few years of their career without making them feel like they've got to go relearn the entire world, right? And I think what? That's what we're facing here is a complete paradigm shift. Yeah, and it really comes back to this idea of a Q adaptability quotient into what you're talking about now. E que emotional intelligence. You add both of those together. That's a transformative experience. But then I also hear Dan Sullivan in the back of my head. You know what I think? Always make your future bigger than your past, and I think it's about giving people hope. You know that that that this is not the end, this is just the next chapter, a new beginning. We're turning the page, if you will, and let's let's lean into that. And let's create that that future together. This has been a great conversation, Kirk. I'm excited about the book. People can grab a copy on Amazon, and if anyone is listening, they have follow up questions they want to connect with you. Continue the conversation. What is the best way for them to reach out and say hello to you? Yeah, absolutely. You can, of course, find me on LinkedIn or you can email me at K Drake, etc. You dash to dot com always available love chatting with people about this. I recognize this is my best guess of things that we need to prepare for, but it's certainly not. It's interesting having comparing the two books. I feel like reading in two point. Oh was very much prescriptive. God, here's what to do. Here is things to try, and in this book, I have way less of that. I just feel like I asked a lot of really good questions, right? Yeah, And then you also you know, you've got some really cool things going on. Like, for example, the mastermind. That's another way people can can work and increase, Um, that it's not just with you. It's, I think, the neat thing it's connect making connections with others can talk about. Yeah, absolutely Thanks on your great participant and supporter. That too. So I appreciate that. So the fintech mastermind my goal waas. You know, we have lots of pockets of conversations that are very industry specific, so you get 10 credit and CEOs together 10 marketing, crediting people together. We have very few things where we intentionally bring in the disruptors...

...into that equation and make us really uncomfortable with our pace with our learning with any of those things. So the mastermind is, you know, we got about 75 80 people in it so far that are probably two thirds fintech, one third credit union leaders. We like Mork reading leaders in it as we go. And it's really designed around having conversations dealing with leadership challenges and keep growth opportunities on both sides. That helped the Fintech understand the creditors perspective but also help the credit unions learn how tow beam or uncomfortable with our discomfort, or how to be more comfortable with our discomfort of the pace of change in those things. And it's it's been doing it for six or seven months now. And every time I get on one of those calls, I'm blown away with the conversation, the thoughtfulness, the key expertise that exists both in the industry and outside. Well, I think what you're doing is very special because it is, you know, bringing this back full circle. You've created a safe place toe, have some a motive conversations to get comfortable being uncomfortable and really toe learn, because you and I are both big believers and masterminds. We both participated them and then personally, and it's about a rising tide raises all ships together. So I appreciate the work that you're doing there and once again for this conversation. Thank you so much for joining me today, Kirk. Thank you once again and always until next time. Thanks for joining me on another episode of banking on Digital Growth. As always. Be well, do good and wash your hands. Thank you for listening to another episode of banking on Digital Growth with James Robert Ley. Like what you hear. Tell a friend about the podcast and leave us a review on Apple podcasts, Google Podcast or Spotify and subscribe while you're there to get even. Mawr Practical in proven insights, visit www dot digital growth dot com to grab a preview of James Roberts bestselling book Banking on Digital Growth or order a copy right now for you and your team from Amazon. Inside, you'll find a strategic marketing and sales blueprint framed around 12 key areas of focus that empower you to confidently generate 10 times more loans and deposits until next time, be well and do good.

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